Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach

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Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach
Seal of the United States Supreme Court.svg
Argued November 10, 1997
Decided March 3, 1998
Full case nameLexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach
Citations523 U.S. 26 ( more )
118 S. Ct. 956; 140 L. Ed. 2d 62
Case history
PriorDefense verdict upheld by the Ninth Circuit
Holding
A district court conducting coordinated pretrial proceedings in multi-district litigation may not reassign a transferred case to itself for trial
Court membership
Chief Justice
William Rehnquist
Associate Justices
John P. Stevens  · Sandra Day O'Connor
Antonin Scalia  · Anthony Kennedy
David Souter  · Clarence Thomas
Ruth Bader Ginsburg  · Stephen Breyer
Case opinion
MajoritySouter, joined by unanimous (except Scalia did not join Part II—C)
Laws applied
28 U.S.C.   § 1407(a)

Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26 (1998), was a United States Supreme Court case in which the Court unanimously held that a district court conducting coordinated pretrial proceedings in multiple cases by designation of the Judicial Panel on Multidistrict Litigation under 28 U.S.C. § 1407(a) has no authority to reassign a transferred case to itself for the actual trial of the case. The Court's decision overturned numerous lower-court decisions upholding what had become a common practice in multi-district cases.

Supreme Court of the United States Highest court in the United States

The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States of America, established pursuant to Article III of the U.S. Constitution in 1789. It has ultimate appellate jurisdiction over all federal and state court cases that involve a point of federal law, and original jurisdiction over a narrow range of cases, including suits between two or more states and those involving ambassadors. The Court holds the power of judicial review, the ability to invalidate a statute for violating a provision of the Constitution. Presidential directives can be struck down by the Court for violating either the Constitution or statutory law. However, it may act only within the context of a case in an area of law over which it has jurisdiction. The Court may decide cases having political overtones, but it has ruled that it does not have power to decide non-justiciable political questions.

Judicial Panel on Multidistrict Litigation

The United States Judicial Panel on Multidistrict Litigation is a special body within the United States federal court system which manages multidistrict litigation. It was established by Congress in 1968 by Pub.L. 90–296, and has the authority to determine whether civil actions pending in two or more federal judicial districts should be transferred to a single federal district court for pretrial proceedings. If such cases are determined to involve one or more common questions of fact and are transferred, the Panel will then select the district court and assign a judge or judges to preside over the litigation. The purpose of the transfer or "centralization" process is to conserve the resources of the parties and their counsel, as well as the judiciary, thus avoiding duplication of discovery and preventing inconsistent pretrial rulings.

Contents

Background

The case originated when Lexecon Inc., a consulting firm that provided expert services to defense lawyers in securities cases, and Lexecon's principal, Daniel Fischel, sued the Milberg Weiss law firm in the United States District Court for the Northern District of Illinois in Chicago. The suit alleged defamation and other torts arising from allegations that Milberg Weiss had made against Lexecon concerning Lexecon's work for lawyers representing Lincoln Savings Bank.

Daniel R. Fischel is the emeritus Lee and Brena Freeman Professor of Law and Business and former Dean of University of Chicago Law School. He co-founded Lexecon, and is now chairman and president of Compass Lexecon.

Milberg LLP is a US plaintiffs' law firm, established in 1965 and based in New York City. It has mounted many class action cases on behalf of investors, and has been recognized as among the leading firms in its field by the National Law Journal, RiskMetrics Group, and Law360. The firm and some of its partners were charged in 2006 with offering improper inducements to plaintiffs. The case against the firm itself was dismissed in 2008, but that same year four partners pleaded guilty to charges, and many others had already left the firm.

United States District Court for the Northern District of Illinois

The United States District Court for the Northern District of Illinois is the federal trial-level court with jurisdiction over the northern counties of Illinois.

Many other lawsuits had been filed in federal courts arising from disputes involving the collapse of Lincoln Savings and Loan Association. The Judicial Panel for Multi-District Litigation had previously directed that all these cases be transferred to the United States District Court for the District of Arizona in Phoenix for coordinated pre-trial proceedings, pursuant to the multi-district litigation statute, 28 U.S.C. § 1407. While the case was pending in Phoenix, Milberg Weiss moved that the case be transferred to Phoenix for purposes of the trial itself. Lexecon objected, arguing that the statute allowed for only pre-trial proceedings, not the actual trial, to be held in the "transferee" district and that it was entitled to have the trial in its chosen forum of Chicago.

Lincoln Savings and Loan Association

The Lincoln Savings and Loan Association of Irvine, California, was the financial institution at the heart of the Keating Five scandal during the 1980s savings and loan crisis.

United States District Court for the District of Arizona

The United States District Court for the District of Arizona is a federal court in the Ninth Circuit.

The district judge in Phoenix, John Roll, [1] granted Milberg Weiss's motion to transfer the case to himself, relying on a series of decisions from courts around the country that had approved of such "self-transfers" by judges hearing multi-district actions. The case went to trial before a jury in Phoenix, which decided in Milberg Weiss's favor.

John Roll American judge

John McCarthy Roll was a United States District Judge who served on the United States District Court for the District of Arizona from 1991 until his murder in 2011, and as chief judge of that court from 2006 to 2011. With degrees from the University of Arizona College of Law and University of Virginia School of Law, Roll began his career as a court bailiff in Arizona and became an assistant city attorney of Tucson, Arizona in 1973. Later that year, Roll became a deputy county attorney for Pima County, Arizona until 1980, when he began serving as an Assistant United States Attorney for seven years. President George H. W. Bush appointed Roll to a federal judge seat in Arizona after Roll served four years as a state judge.

On appeal to the United States Court of Appeals for the Ninth Circuit, Lexecon challenged, among other things, the propriety of the District Court's transfer order. The Court of Appeals rejected the appeal and Lexecon then sought review by the Supreme Court. While Lexecon's petition for certiorari was pending, law professor Charles Alan Wright, a leading authority on federal civil practice and procedure, filed an unusual amicus curiae brief on his own behalf, supporting Lexecon's position and opining that the multi-district litigation statute had been misinterpreted to authorize "self-transfers" for more than twenty years. The Supreme Court agreed to hear the case.

United States Court of Appeals for the Ninth Circuit Federal court with appellate jurisdiction over the districts of Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington

The United States Court of Appeals for the Ninth Circuit is a court of appeal that has appellate jurisdiction over the district courts in the following districts:

Certiorari is a court process to seek judicial review of a decision of a lower court or administrative agency. The term comes from the name of an English prerogative writ, issued by a superior court to direct that the record of the lower court be sent to the superior court for review.

Charles Alan Wright Constitutional lawyer, law professor

For other people named Charles Wright, see Charles Wright

Opinion of the Court

In an opinion authored by Associate Justice David H. Souter, the Supreme Court reversed the Ninth Circuit and held that under the multi-district litigation statute, the transfer of an action for coordinated multidistrict pretrial proceedings did not authorize the transferree judge to transfer the case to himself or herself for the actual trial. Rather, the statute requires that when all pretrial proceedings are completed, the action must be sent back ("remanded") for trial in the district where it was originally filed. Therefore, the jury trial of Lexecon's claims against Milberg Weiss should have taken place in Chicago rather than Phoenix, and the verdict rendered in Phoenix was invalid.

The Court also rejected Milberg Weiss's argument that even if the jury trial had taken place in the wrong venue, this was a harmless error that should not result in reversal. The Court concluded that trying a case in the wrong district, over a party's express objection, was not harmless.

Justice Souter's opinion spoke for a unanimous Court, except that Justice Antonin Scalia did not join in a portion of the opinion that addressed the legislative history of Section 1407.

Aftermath

After the Supreme Court remanded the Lexecon case, it was transferred back to the Northern District of Illinois for trial. The case was retried before a jury in Chicago, which decided in favor of plaintiffs Lexecon and Fischel and awarded them $45 million in compensatory damages. The case then settled for a total of $50 million before the jury could decide whether to also award punitive damages.

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References

  1. Dillon, Patrick; Cannon, Carl M. (2010). Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate American to Its Knees . New York City: Broadway Books. pp. 276–277. ISBN   9780767929943.